Legal Business

Updated: Clifford Chance in line for windfall payment after PwC reaches European Lehman settlement

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Litigation Clifford ChancePwC
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Clifford Chance is among the creditors of the European operations of Lehman Brothers set to receive a windfall after administrator PwC announced a total payout of $7.8bn, the latest in a series of payments made to creditors of the former US investment bank as it nears the end of its mammoth winding-up process.

According to one partner at the Magic Circle firm, the payment could be as much as £10m and a spokesperson for PwC said creditors are likely to receive payment before the end of the calendar year.

Lehman Brothers filed for Chapter 11 bankruptcy in September 2008, listing $639bn of assets against $613bn of outstanding debt but within days creditors filed claims of $1.2trn, double its assets.

PwC reached a settlement with Lehman Brothers International Europe (LBIE)’s former US parent company Lehman Brothers Inc (LBI) in June, paving the way for a return of assets held by the bank. With this latest round of payouts creditors are expected to receive all their money back plus, in some cases, interest.

Meanwhile, the legal fees in the LBIE administration for the six months to 14 September 2013 have reached £295m, with the total US and UK fees and expenses earned by lawyers and other professionals standing at $2bn since Lehman Brothers filed for bankruptcy, an indication of the scale of the task of unwinding the global financial institution’s affairs.

The most recent legal costs relate to advice given, as well as court proceedings and litigation conducted in numerous jurisdictions by a number of legal firms in connection with the LBIE administration.

It was Linklaters, advising alongside Davis Polk & Wardwell, that earlier this year won the settlement resolving all legal and factual issues between LBIE and LBI. Linklaters has advised PwC as administrator on English law matters since 2008. The Magic Circle firm has fielded a large team, including restructuring partners David Ereira, Tony Bugg and Richard Holden in London and litigation partner James Warnot in New York.

Other firms to land roles on the administration include Weil, Gotshal & Manges, New York-based Hughes Hubbard & Reed and legacy Norton Rose.

Clifford Chance declined to comment.

It is expected a number of other Lehman advisers will gain windfalls for written-off fees.

Update: Over 30 other law firms have been named as creditors set to receive a windfall of the European operations of Lehman Brothers in a list published by PwC on 5 December.

The firms owed money by Lehman Brothers International Europe (LBIE) are confirmed as trade creditors in a 300-strong list. In addition to Clifford Chance, fellow Magic Circle firms Allen & Overy, Linklaters, Slaughter and May, and Freshfields Bruckhaus Deringer are due to be reimbursed.

Other firms listed includes Dublin-based firms A&L Goodbody, McCann FitzGerald and Dillon Eustace; and US firms McDermott Will & Emery, Skadden, Arps Slate, Meagher & Flom, and Weil, Gotshal & Manges. The now-defunct Dewey & LeBoeuf is also named as a recipient.

sarah.downey@legalease.co.uk

Legal Business

Clifford Chance in line for windfall payment after PwC reaches European Lehman settlement

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Litigation Clifford ChancePwC
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As latest payout confirmed to Lehman’s creditors, total US and UK costs soar to $2bn

Clifford Chance is among the creditors of the European operations of Lehman Brothers set to receive a windfall after administrator PwC announced a total payout of $7.8bn, the latest in a series of payments made to creditors of the former US investment bank as it nears the end of its mammoth winding-up process.

According to one partner at the Magic Circle firm, the payment could be as much as £10m and a spokesperson for PwC said creditors are likely to receive payment before the end of the calendar year.

Lehman Brothers filed for Chapter 11 bankruptcy in September 2008, listing $639bn of assets against $613bn of outstanding debt but within days creditors filed claims of $1.2trn, double its assets.

Legal Business

Clifford Chance global managing partner vote: Layton takes the crown

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The long-awaited decision over who will replace David Childs as Clifford Chance’s global managing partner (MP) has been announced, with the partnership electing global head of corporate Matthew Layton to take over the top management role after voting closed yesterday evening (27 November).

Layton (pictured above with Childs) was widely cited in the early stages of the election process as favourite to lead the 3,017-lawyer Magic Circle firm, with challengers emerging as Paris-based office managing partner and M&A lawyer Yves Wehrli; global head of tax, pensions and employment David Harkness; and City-based banking and finance partner Andrew Carnegie.

One of the four global MP candidates needed to secure at least 50% of the vote yesterday. If not, a second round of voting would have taken place between the top two candidates, and a result would not have come out until next month.

The sounding process for nominations opened in October, while the shortlist of candidates was confirmed to the partnership this month. While existing and ex-partners have said there was no one obvious successor to take over Child’s mantle, Layton’s position appeared to strengthen as the election process wore on.

Layton said on the news of his election: ‘Clifford Chance enjoys an enviable position, entrusted with the best and most challenging work for many of the world’s most successful and forward-looking organisations. The evolution of global markets is creating new opportunities and risks for our clients. For these organisations, Clifford Chance’s well-established ‘one firm’ approach that combines expertise and deep experience across sectors, practices and geographies around the world is of huge value. I am greatly looking forward to working with my fellow partners and colleagues as we continue to build on our position at the forefront of the global legal elite.’

Layton will take over the four-year term on 1 May 2014 from Childs, who himself took over as managing partner on 1 May 2006.

Childs added: ‘I feel very proud and honoured to have had the opportunity to serve as the managing partner of Clifford Chance. I am confident that in passing the baton on to Matthew I leave the firm in very good hands. I know that Matthew is as ambitious for the firm as I have been, and I’m sure Clifford Chance will go from strength to strength under his leadership.’

The global MP election follows a run of senior appointments, including finance partner David Bickerton, who was elected to serve a further four-year term as London managing partner in an uncontested election.

Bickerton’s election followed the appointment of banking and finance partner Simon Sinclair as London capital markets head, succeeding securitisation partner Andrew Forryan, as current London tax, pensions and employment (TPE) chief Chris Davies was simultaneously elected to replace David Harkness as global TPE head.

In October, high profile litigator Jeremy Sandelson – who early in the global MP election process was tipped as a possible contender for the role – was re-appointed as global head of the litigation and dispute resolution practice for a second term in an uncontested election.

sarah.downey@legalease.co.uk

Legal Business

Investigations: RBS appoints panel firm Clifford Chance to conduct independent review

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In-house Clifford ChanceLinklatersThe Royal Bank of Scotland
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Investigations have become big business for the City’s thriving litigation teams although the majority of them happen behind closed doors for valued clients and are not said to offer an ‘independent’ assessment.

A recent exception is the Royal Bank of Scotland’s (RBS) disclosure yesterday (25 November) that it has appointed Clifford Chance (CC) to conduct an independent inquiry into the treatment received by small business customers in financial distress, after allegations that the bank deliberately drove them to collapse for its own gain.

While large City firms are undoubtedly sophisticated providers of complex legal services their close relationship with many of the large banks and financial institutions at the very least raises questions over their ability to give a truly independent viewpoint.

Despite bank panels shrinking over recent years it is still common for them to include a number of the Magic Circle and larger firms, with RBS 21-strong legal roster, unveiled in July, including CC, Allen & Overy, Freshfields Bruckhaus Deringer and Linklaters as well as many of the larger City and transatlantic firms such as Eversheds, Hogan Lovells and Norton Rose Fulbright.

CC itself is on the panel for Europe, the Middle East and Asia, with a mandate to act in most of the jurisdictions where it has offices.

However, when asked to discuss how the inquiry will work given the Magic Circle client’s existing relationship with the bank, a spokesperson declined to comment.

CC’s instruction by RBS comes after independent reports from both the former Bank of England deputy governor Sir Andrew Large and government adviser Lawrence Tomlinson raised concerns over the bank’s treatment of struggling small businesses, with the report by Tomlinson accusing the bank of pushing small firms into its turnaround unit, the Global Restructuring Group (GRG), so it could charge higher fees and take control of their assets.

In a letter published on RBS’ website, group chief executive Ross McEwan noted that changes had already been put in place but added: ‘to ensure our customers can have full confidence in our commitment to them I have asked the law firm, Clifford Chance, to conduct an inquiry into this matter, reporting back to me in the new year.’

On a more general level, City law firms’ investigations practices are highly developed and their ability to provide detailed evidentiary analysis, often alongside accountants, is increasingly being used to show seriousness of intent.

Only recently, fellow Magic Circle firm Linklaters, alongside accountants PwC, entered into an ongoing independent review of client private securities company G4S, following allegations that employees engaged in false billing practices between 2005 and 2013.

As G4S attempts to rebuild its brand the company asked Linklaters to assess whether there was evidence of dishonesty or criminal conduct by employees who billed the Ministry of Justice as part of an electronic monitoring contract.

The firm is also advising G4S in relation to a Serious Fraud Office (SFO) probe on the same matter.

francesca.fanshawe@legalease.co.uk

Legal Business

BG Group slims down legal roster to three as CC wins a spot

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For a 6,000-plus-employee FTSE 100 energy company operating across 20 countries in five continents, BG Group’s panel of four law firm was already slim but just got slimmer, with the news that Allen & Overy and Herbert Smith Freehills have been dropped in favour of Clifford Chance, which wins a place alongside incumbents CMS Cameron McKenna and Freshfields Bruckhaus Deringer.

The appointment of the three firms – which will all offer full service advice to the energy giant – came into effect on the 1 November and follow a relatively short pitch process, which began in September.

The review was handled by general counsel (GC) Graham Vinter – who joined the group in 2007 from A&O where he was project finance head – alongside deputy GC Jason Klein.

A&O, HSF, Freshfields and CMS were appointed to BG’s panel back in 2010, after a complex seven-month pitch process that saw BG Group’s lengthier list of key legal advisers trimmed to just four.

Major work for the UK firms since 2010 have included Freshfields acting on the $1.7bn (£1.1bn) sale of the gas group’s majority holding in Brazilian gas distribution company Comgas, led by City corporate partner Graham Watson, alongside London managing partner Mark Rawlinson, Amsterdam corporate partner Robert ten Have, and tax partners Sarah Falk and Eelco van der Stok.

The UK panel is one of four similar arrangements at BG Group, which also operates legal panels in Brazil, North America and Australia.

A BG spokesperson said: ‘Following an extensive review of its UK legal panel, BG Group has appointed Clifford Chance LLP as a full service firm to its panel alongside existing firm Freshfields Bruckhaus Deringer LLP. CMS Cameron McKenna also retains its place on the panel. The arrangements took effect from 1 November.’

The move comes as GCs are typically moving towards smaller panels with deeper relationships with their advisers, however, this panel is considerably smaller than many, including the likes of fellow FTSE 100 company Vodafone, where the panel runs into double figures.

francesca.fanshawe@legalease.co.uk

Legal Business

Shale Gas: CC and Morgan Lewis lead on $10bn Chevron Ukraine deal

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Corporate Clifford ChanceMorgan, Lewis & Bockius
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With major international firms angling to position themselves as leaders in the burgeoning shale gas field, Clifford Chance (CC) is advising energy giant Chevron on its $10bn shale gas exploration project with the Ukrainian government, a mammoth geopolitical deal which could see the region end its dependence on natural gas imported from Russia by 2020.

The Magic Circle firm, acknowledged as a top-tier firm in the oil and gas sector, is advising Chevron opposite US firm Morgan Lewis and Ukrainian independent Asters, which are advising the Ukrainian government and developing something of a track record for high value deals having advised Royal Dutch Shell on a similar value shale deal in Eastern Ukraine earlier this year.

Moscow-based business and finance partner and former Dewey & LeBoeuf lawyer Jonathan Hines is leading the Morgan Lewis team advising state-owned Nadra Oleska in connection with the Chevron joint venture, while energy transactions partner David Asmus is also advising.

Morgan Lewis’s recent experience in the region’s oil and gas market also includes advising Itera Oil and Gas over Russian state-owned Rosneft’s acquisition of a 49% stake in the company for $2.9bn in July this year.

Meanwhile for CC, American multinational energy corporation Chevron is one of several major clients in the global shale market, alongside Apache Corporation, Houston-based Noble Energy, oilfield services giant Schlumberger, Halliburton and Baker Hughes.

In recent years Chevron has also turned to Skadden, Arps, Slate, Meagher & Flom for high-end transactional work, with the firm in 2010 advising the energy giant when it sought to expand its shale gas holdings by acquiring Atlas Energy for $4.3 billion.

Besides CC, other UK firms to secure an early foothold in the fledgling industry include Allen & Overy and Norton Rose Fulbright, which in June won leading roles when Centrica acquired a 25% stake of Cuadrilla’s shale gas licences in North West England.

This latest transaction could have huge implications for the former Soviet republic’s push to shed its reliance on Russian energy, as the government has signed a 50-year joint ‘fracking’ venture with Chevron to extract shale gas in western Ukraine, energy minister Eduard Stavytsky confirmed at a press interview in Kiev on Tuesday (5 November).

As the region is reported to have Europe’s third-largest shale gas reserves, it is expected that Chevron will invest $350 million in the first two to three years to explore shale gas in the Oleska field in Western Ukraine, which is located across regions Lviv Oblast on the Polish border and Ivano-Frankivsk, which shares a border with Romania to the south.

sarah.downey@legalease.co.uk

Legal Business

High energy – Bracewell & Giuliani continues City push with CC partner hire

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Strategic recruitment Clifford Chance
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With shale gas emerging as one of the most touted new markets for advisers, one of the leading US players in the sector this week continued its well-publicised City push with Bracewell & Giuliani recruiting Clifford Chance (CC) energy and construction partner Tracy London.

The appointment is the eighth senior London hire this year for the 485-lawyer Bracewell, which is best known in the US for its energy work and the addition of former New York mayor and US presidential candidate Rudolph Giuliani (pictured) as a name partner in 2005.

Bracewell London managing partner Julian Nichol said: ‘Tracy is a leading energy construction lawyer in the City, and her arrival gives us market-leading expertise. I know our clients will be delighted with this.’

The Texas-bred Bracewell launched its London branch in 2007 but has only recently made a substantive play in UK law, in part reflecting expectations that Europe’s shale gas sector will echo the transformation seen in US energy production over the last decade.

While shale gas – and the hydraulic fracturing method of extracting it – remains highly controversial in Europe, the UK government is currently trying to stimulate moves to extract sizeable reserves from northern England.

Other Texan law firms that have been recently investing in the UK include Andrews Kurth, which announced in May it was to launch a UK law energy practice after hiring former Ashurst partner Peter Roberts to build the team. Also Locke Lord last year launched in the City after recruiting a large team from the legacy Salans. The firm now has 17 partners in London.

With a fifth of the UK’s existing power generation sources set to be decommissioned by 2020, many are predicting dramatic growth in the UK’s shale gas industry. Such a development would likely pit leading US advisers like Bracewell, Vinson & Elkins and Baker Botts against London’s top firms in fighting for dominance of a lucrative new niche.

Sarah.downey@legalease.co.uk

For more on the shale gas see ‘The $6.4trn question’

Legal Business

Clifford Chance handed a major role for the Co-operative Bank as A&O faces conflict

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Corporate Allen & OveryClifford Chance
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Clifford Chance (CC) has been handed a role advising the ailing Co-operative Bank on its recapitalisation due to a conflict of interest at Allen & Overy (A&O) as the bank prepares to float next year.

CC capital markets partner Iain Hunter and insurance and corporate partner Hillary Evenett are advising the bank on its recapitalisation after A&O’s dual role as adviser to the Co-operative Group and its banking arm came under question in light of bondholder action that will now see a group of hedge funds take over a 70% stake in the bank.

The Co-op has been in negotiations after it emerged in June that its bank had a £1.5bn capital deficit due to non-performing loans.

CC’s role comes after Shearman & Sterling secured a significant victory for the bondholders led by Silver Point Capital and Aurelius Capital Management, under which they take a controlling stake in the bank instead of the 25% first on offer. Shearman’s financial regulatory head Barney Reynolds, corporate partners Laurence Levy and Jeremy Kutner, acquisition finance partners Anthony Ward and Clifford Atkins and bankruptcy partner Soloman Noh led on the deal.

CC has advised the Co-op in the past, including on its £750m acquisition of Lloyds Banking Group branches. That deal involved the Co-op taking over 632 branches of Lloyds Banking Group for £350m up front with an additional contingent payment of £400m depending on performance. Evenett also led in that instance alongside corporate partner Mark Poulton.0

CC was initially called in by the Co-op to handle a shareholder relationship agreement between the bank and the Co-op Group in early October. The role has now been extended to cover other contractual provisions, an under-writing agreement and a review of other documentation. CC is viewed as strongly placed if as expected the bank conducts an initial public offering next year.

A&O will continue to advise the Co-op led by partners Mark Sterling and Richard Slynn, who were both unavailable for comment at the time of writing. The Magic Circle firm continues to advise both the group and the bank, though one adviser said that A&O’s dual role will be under further scrutiny after the reorganisation of Co-op closes in December, when 70% of the bank’s ownership goes to bondholders.

Other advisers on the deal include Linklaters, which has been involved in the project since May. The City giant had initially advised a syndicate of lending banks to the Co-op Group and has subsequently undertaken several other substantive roles for financial advisers and pension trustees. Addleshaw Goddard has provided support for the Co-op on data rooms and intra group documentation between the bank and group.

Given the change of ownership of the bank, a new general counsel (GC) is set to be appointed to start before the end of November. The Co-op has indicated that the roles of all advisers to the group and banks will be reviewed by the new bank GC and Asher. The reorganisation of the group is also set to lead to the creation of two separate in-house legal teams.

david.stevenson@legalease.co.uk

Legal Business

Deal Watch: Hogan Lovells and CC lead on AMC Networks’ $1bn buyout

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Corporate Clifford ChanceHogan Lovells
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Clifford Chance (CC) and Hogan Lovells have plugged into the renaissance in US television production after advising on a $1bn (€750m) buyout by US entertainment group AMC Networks of Chellomedia, the international content division of media company Liberty Global.

The acquisition announced on Monday (28 October) provides the entertainment group with 68 new television channels distributed to more than 390m households in 138 countries, and the opportunity to distribute its programming worldwide, including celebrated shows like Breaking Bad, Mad Men, and The Walking Dead.

CC’s TMT and tax groups worked on the deal, with City-based head of media Daniel Sandelson advising AMC Networks alongside corporate partner Ben Sibbett in New York. The firm’s tax team was led by partners Nick Mace and Philip Wagman, based in London and New York respectively.

Hogan Lovells advised Liberty Global, controlled by US tycoon John Malone, on the disposal of Chellomedia, with corporate partner Alan Greenough leading alongside corporate of counsel Keith Woodhouse in London.

Hogan Lovells had previously worked on Liberty’s European competition, pensions and employee share plan for its $24bn takeover of Virgin Media in February this year. It has also previously been retained by Chellomedia on its purchase of MGM Networks from Metro-Goldwyn-Mayer Studios in August 2012.

Liberty Global, the largest cable company in Europe, will retain its Dutch premium channel business, consisting of its Film1 and Sport1 channels.

Greenough commented: ‘We are pleased to have advised on this high profile and strategically important transaction for our clients which is attractive from both a valuation and liquidity perspective. It will allow Liberty Global to simplify its business and focus on its core markets and more strategic programming opportunities.’ The transaction is expected to close in the first quarter of 2014.

sarah.downey@legalease.co.uk

Legal Business

Deal Watch: CC and DLA Piper step up on £300m Dr Martens buyout

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Corporate Clifford ChanceDLA Piper
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It has become a cliché among deal professionals to say that – even in these risk-averse times – there is still the confidence and financing to make acquisitions with a solid story. Securing one such deal are DLA Piper and Clifford Chance (CC), who have taken lead roles advising on the £300m sale of Dr Martens – the iconic footwear brand – by the shareholders of parent group and licensee of the brand R Griggs Group. The company was sold to an investment vehicle backed by London-based private equity house Permira.

DLA fielded a Birmingham-based team for R Griggs, the majority of which is owned by the Griggs family who have run the brand for more than 50 years. DLA’s team was led by partner Noel Haywood and included senior associate Ceri Williams-Jones and associates Simon Wright and Rosie Hendon.

CC advised key private equity client Permira on the acquisition, which is expected to complete in January 2014 adding to Permira’s portfolio of fashion labels like Hugo Boss and New Look.

A heavyweight line-up of corporate partner Jonny Myers and global corporate head Matthew Layton led the City giant’s team. Layton advised Permira on its €3bn (£2.5bn) sale of frozen foods business Iglo Group last year, while Myers previously led on its €220m (£194m) acquisition of a majority stake in Irish healthcare equipment manufacturer Creganna.

DLA’s Haywood commented: ‘This was a great transaction to be involved with. Dr Martens is an iconic and authentic brand that has millions of customers worldwide. Griggs is also a cherished and longstanding client of DLA Piper so we were delighted to have advised the shareholders on this important transaction.’

This is the second time Dr Martens has been put up for sale in the last two years, after the family-owned R Griggs held an auction that failed to attract enough bids. Chief executive David Suddens said the family was selling for personal reasons to invest their money elsewhere.

Dr Martens boots were invented in 1947 by Klaus Martens, a German doctor who had a foot injury and created the air cushioned sole. Once favoured among workmen, the company, which is headquartered in Northants on the original site of the factory, now sells in 63 countries, principally in the US, Asia, Europe and the UK. Last year Dr Martens posted sales of £160.4m and a pre-tax operating profit of £22.9m, which it expects to grow to more than £30m in 2013.

Permira, one of Europe’s leading private equity houses, focuses its investment in five core sectors: consumer, financial services, healthcare, industrials and TMT. The buyout house – one of CC’s top corporate clients – handles funds with total committed capital of around €22bn.

Francesca.fanshawe@legalease.co.uk

Click here for an assessment of CC’s private equity practice